Government Retiree Bonuses, Is the Timing Right?

During May, Older American’s Month, Senators Carlton Dowe (I) and Shawn Michael Malone (D) introduced legislation that would provide government retirees over age 60 that have been on the retiree payroll for more than a year with bonuses of 3.5 percent of their base annuity. The bill passed the Appropriations and Budget Committee unanimously and was also approved in the Rules Committee.

The bill’s intent is to provide financial relief to seniors on fixed incomes who presently receive an annual 1.5 percent cost of living increase. Senator Dowe identified revenues from the VI Lottery as a funding stream for this impending bonus. If the bill passes the full Senate, over 5,000 retirees would be slated to receive a bonus of about $2,000.

The bill does not come without bringing concern. The $2.27 million that it would take to provide this bonus will result in an additional liability to the government during a year when the government has not only predicted a shortfall of $188-million, but has already asked for legislative authorization to borrow money to “keep the territory’s financial boat afloat.”

Ironically, Senator Carlton Dowe is also leading the measure to authorize the VI Government to borrow $200 million from banks to keep the VI Government from resorting to layoffs. In Senator Dowe’s words to the media, “the measure is necessary given the global economic downturn and current state of the territory’s finances.”  If this bill is passed, Governor John P. deJongh (D) would be authorized to enter into loans or borrow from other government accounts to remain financially secure during the remainder of 2009 and possibly 2010.    

While AARP Virgin Islands appreciates the Legislature’s efforts to help seniors by providing them with bonuses, there are several questions that AARP feels should be answered.

1. Will the Legislature be able to overcome the current deficit and still be able to provide seniors with this benefit?
2. What other financial obligations have been legislatively mandated for the revenues generated by the V.I. Lottery? Have those obligations been met?
3. At a time when our neighboring island of Puerto Rico is planning to lay off 30,000 government workers in order to stay afloat, can the economic picture be so different for the VI that it can afford to create new debts for the government?
4. Although the bonuses don’t add to the Government Employees’ Retirement System unfunded liability, it doesn’t help resolve any of GERS’ over $1-billion debt the government created by its ten years of early retirement programs. Why not use lottery revenues to lower the unfunded liability and help the system remain solvent?
5. What relief is going to be provided for the remainder of Virgin Islands seniors, over age 60, who have never worked for the VI Government?

We’re well aware that these are tough times, and retirees can use the assistance. But, given these circumstances, is the timing right for giving bonuses?